Nauticus Robotics' Q3 2025 Earnings Call: Contradictions Emerge in Software/Hardware Strategy, ELOC Use, and Revenue Contributions

Date of Call: November 14, 2025

Financials Results

• Revenue: $1.9M, down $0.1M sequentially and up $1.6M YOY

Guidance:

• Entered Q4 financially stronger and expect to maintain NASDAQ listing via lender support and conversions
• 2026 commercial scaling prioritized: booking long-term contracts and deploying revenue-generating nearshore workflows (mooring-line and riser inspections)
• ToolKITT software rollouts and retrofits targeted for 2026 season with software licensing potential (~300 ROVs addressable)
• $250M ELOC will be used only for immediately accretive, cash-flow-generating opportunities
• Investor Day planned early 2026 in Stuart, Florida

Business Commentary:

* Commercial Milestones and Market Demand: - Nauticus Robotics reported a turning point in its business, marking progress from early stage development to scalable commercial deployment. - Key achievements included a deep dive of the Aquanaut to 2,300 meters and a $250 million equity facility to support emerging opportunities in defence and asset integrity work. - The shift in market demand towards autonomous operations and the reduction of personnel offshore are driving growth.

• Financial Performance Challenges:
• Revenue for Q3 was $1.9 million, down $0.1 million sequentially but up $1.6 million from the same quarter last year.
• The decrease in Q3 revenue was a strategic decision to defer near-term work for specific deepwater workflows, positioning the company for longer-term contracts.
• Operating expenses were $7.8 million, up $1.9 million from Q3 2024 but down $0.6 million sequentially.

• Software and Go-to-Market Strategy:
• The company successfully integrated Nauticus ToolKITT software on a third-party ROV, demonstrating its capabilities in commercial operations.
• This integration is part of the company's strategy to enhance its revenue through software licensing and partnerships, targeting a market of more than 300 vehicles.
• The focus is on providing high-margin, scalable software solutions to support the growth of autonomous operations.

• Regulatory Compliance and Shareholder Equity:
• Nauticus Robotics faces a NASDAQ compliance issue, requiring a market cap of $35 million or $2.5 million in shareholder equity.
• The company is working to address this through shareholder equity improvements, with a NASDAQ hearing scheduled for early December.
• Efforts include conversions of outstanding debt into equity and raising funds through at-the-market offerings to maintain the NASDAQ listing.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • Management described Q3 as a "turning point" and repeatedly cited momentum: "entering the final quarter...with more momentum than at any point in the company's history," "entered Q4 financially stronger," and emphasized deepwater milestones, ToolKITT commercialization and a growing 2026 pipeline.

Q&A:

• Question from Peter Gastreich (Water Tower Research LLC): First, it's great to see your successful integration and first paid operation of ToolKITT on a retrofitted ROV. This does look like a very critical step in your capital-light strategy. I just want to ask, when compared to the full stack newbuild vehicle sales like Aquanaut, how should we think about the enhanced margin potential for these software-only retrofits?
  Response: ToolKITT software carries gross margins in the 80%+ range, making it a high-margin, capital-light path to cash-flow breakeven and an immediate market opportunity (~300+ ROVs).

• Question from Peter Gastreich (Water Tower Research LLC): Would you be able to accelerate scaling your operations by acquiring existing vehicles in operation? You mentioned the 300 or so that are out there now... Would that be a possible use of funds?
  Response: Yes — management is evaluating acquiring existing untethered/tethered vehicles to scale faster (vs. 9–18 months to build Aquanauts) to enter market sooner.

• Question from Peter Gastreich (Water Tower Research LLC): You talked about supply chain and tariff risks previously. As we've moved into Q3, what does that environment look like today, especially for long-lead items, and how are you addressing the risks?
  Response: Supply-chain is the toughest challenge: the company has proactively ordered long-lead parts, purchased spares using available capital, and expects deliveries though lead times require ordering many months in advance.

• Question from Peter Gastreich (Water Tower Research LLC): A few months into the SeaTrepid integration, have there been any unexpected bottlenecks you've needed to address?
  Response: No major integration bottlenecks — demand currently exceeds ROV capacity; SeaTrepid added sales expertise and increased commercial reach.

• Question from Peter Gastreich (Water Tower Research LLC): On the deepsea rare earth exploration strategy, what customer types are you targeting — private exploration companies or government contracts?
  Response: Focus is on inspection/observation for exploration (primarily private exploration partners), not mining equipment; potential to add sampling capability and partner with platform owners.

• Question from Peter Gastreich (Water Tower Research LLC): How should we think about the timeline and roadmap to commercialization relative to nearer-term oil & gas and wind opportunities vs. ocean minerals?
  Response: Priority is immediate commercial workflows (mooring/riser inspections) and booking 2026 contracts now; ocean-minerals work is exploratory/longer-term and secondary to 2026 execution.

• Question from Peter Gastreich (Water Tower Research LLC): Is your focus U.S.-centric or global?
  Response: There is significant international interest, but nothing imminent; primary focus remains current commercial markets (U.S./Gulf) while evaluating global opportunities.

• Question from Peter Gastreich (Water Tower Research LLC): Regarding the $250M equity line of credit, are there milestones or triggers investors should expect for drawing that capital?
  Response: ELOC will be used only for immediately accretive, cash-flow-generating opportunities; acquisitions must pass an accretion filter — no long R&D plays.

• Question from Robert Mendrala (Private investor): What is the plan/steps to cure NASDAQ noncompliance, specifically given market cap appears below required levels?
  Response: Plan is to achieve the shareholder-equity alternative (>$2.5M) via lender conversions and other commitments to maintain listing; management expects to provide info before an early-December NASDAQ hearing.

• Question from Jason Nicolini (Private investor): How will you protect existing investors from dilution and the potential for ELOC investors to buy at low prices?
  Response: Management is aligned with shareholders and will not draw the ELOC unless it creates value for all shareholders; additional registered shares are to enable accretive M&A opportunities, not indiscriminate dilution.

Contradiction Point 1

Software and Hardware Growth Strategy

It highlights a shift in emphasis between hardware and software growth strategies, which directly impacts expectations regarding the focus of the company's growth and potential revenue streams.

How should we assess the margin potential of software-only retrofits versus full-stack newbuild vehicle sales like Aquanaut? - Peter Gastreich(Water Tower Research LLC)

2025Q3: Software is key to Nauticus's future, with gross margins above 80%. This provides a path to cash flow breakeven faster than services. The software enhances ROV operations, reducing nonproductive time and fatigue for operators. Nauticus has identified 300+ vehicles that can benefit from this software in the near term. - John Gibson(CEO)

How do you approach growth opportunities in oil and gas, environmental, and wind energy sectors? Are there differences in complexity, safety, or day rates across these areas? - Peter Gastreich(Water Tower Research)

2025Q2: Nauticus prioritizes work based on highest margins, considering costs associated with different sectors. The company offers capabilities fungible across sectors, requiring minimal adjustments. Current demand exceeds assets, necessitating additional equipment to meet work requirements. - John Willis Gibson(CEO)

Contradiction Point 2

Financial Strategy and ELOC Usage

It involves differing perspectives on the use of the equity line of credit (ELOC) and the focus on cash flow generation, which are crucial for financial planning and investor confidence.

What is the optimal timing to draw on the $250 million equity line of credit given current market conditions? - Peter Gastreich(Water Tower Research LLC)

2025Q3: The ELOC will only be used for cash flow-generating acquisitions. We are focused on enhancing our business now, not pursuing futuristic R&D initiatives. The ELOC is a tool for immediate accretive opportunities. - John Gibson(CEO)

What's your outlook for cash position this quarter and in 2025? - Unidentified Shareholder

2025Q2: Nauticus has strong lender support, allowing access to a $19 million debt facility. The company plans to minimize additional debt and dilution, focusing on cash flow positivity. Cash position is secure. - John Willis Gibson(CEO)

Contradiction Point 3

Software Revenue Contribution and Focus

It highlights differing perspectives on the expected contribution of software sales to overall revenue, which is crucial for investor expectations and strategic planning.

What are the key customer types for deep-sea rare earth exploration, and what is the expected commercialization timeline? - Peter Gastreich (Water Tower Research LLC)

2025Q3: About 25% of that $16 million in revenue will come from software sales and proposals for technology advancements. - John Gibson(CEO)

How confident are you in the $16 million revenue outlook for the year, and what's the breakdown of software sales? - Unidentified Analyst (Investor)

2025Q1: About three-fourths of the $16 million revenue outlook for the year comes from day rate work, with the remaining quarter attributed to software sales and proposals for technology advancements. - John Gibson(CEO)

Contradiction Point 4

Use of ELOC for Cash Flow Generation

It involves different statements on the intended use of the equity line of credit, which impacts financial strategy and investor relations.

What is the optimal timing to access the $250 million equity line of credit under current market conditions? - Peter Gastreich (Water Tower Research LLC)

2025Q3: The ELOC will only be used for cash flow-generating acquisitions. - John Gibson(CEO)

What is NVIDIA's strategic use of the equity line of credit, and what is the timing of its draw? - Brian Johnson (Technalysis Research)

2025Q1: Our ELOC is a tool that we have certainly at our disposal should we want to potentially leverage that to help accelerate our strategy. - John Gibson(CEO)

Contradiction Point 5

Capital Requirements and Funding Strategy

It involves the company's approach to capital requirements and funding, which are critical for supporting operational growth and investor expectations.

When is the best time to draw down the $250 million equity line of credit under current market conditions? - Peter Gastreich (Water Tower Research LLC)

2025Q3: The ELOC will only be used for cash flow-generating acquisitions. - John Gibson(CEO)

Can you discuss the capital requirements for the business? - Kunal Madhukar (Water Tower Research)

2024Q4: We're focused on nondilutive capital sources. Assets like Aquanaut Vehicle 3 and an additional ROV can generate $6 million to $8 million per season. Contract-based lending is a potential source for capital to assemble these assets. - John Gibson(CEO)